Does this make sense?

Chris_Corbett

Tixy,

Thanks - answer is I hadn't noticed your post as distracted by Miss Troll.

I see where you are coming from and I guess the reason I'm discounting the payment side is that at the moment any saving I have I put away in Premium Bonds for ease of access so I don't fully realize the interest I could be earning. No excuse really but that's the practicality of it.

Also surely there is a longer term angle on this in that I will also have £15k tucked away in an annual ISA allowance that I would have lost. In times to come interest rates will rise and that tax free income could pay offsett the interest I might have made on £440 per month savings.

Foxy-Stoat_3

Chris_Corbett wrote: »

OK to close off then:

Loan - £15,000
Interest at 3.7% APR over 3 years = £856.20 (use a loan calculator)
Total = £15,856

ISA - Deposit £15,000
Year 1 interest at 2.1% = £315
Year 2 interest = £321.62
Year 3 interest = £328.36
Total interest earned = £964.98
Total interest paid on loan = £856.20

Your plan seems 100% fool proof so go for it, you will walk away with a cool £108.78 profit after 3 years...that's £3.02 a month, very nice.

Could you not just set up a direct debit and pay £3.02 into a separate account and forget about it for 3 years...you will achieve the same thing and not have the added worry of a 5 figure loan or all the debt possibly effecting maybe a mortgage or other loans that you want to take out.

Chris_Corbett

FoxyStoat - yes but I will also have secured my year's ISA allowance that I wouldn't able to otherwise. In future years that could prove much more profitable than it it right now.

Foxy-Stoat_3

Chris_Corbett wrote: »

FoxyStoat - yes but I will also have secured my year's ISA allowance that I wouldn't able to otherwise. In future years that could prove much more profitable than it it right now.

So are you going to take out a £15,000 loan every year then?

If your salary allows this amount of borrowing then it seems like a good idea....actually if your looking years into the future and you have a mortgage, paying £15,000 off will save you a lot more than any ISA can pay you over the remaining term of the mortgage.

Tixy

With either option by the end of year 3 you end up with £15k in savings in ISAs.

In terms of using your ISA allowances it doesn't matter if you used all in year 1 or part of them each year for 3years.

The only time it might be a factor is if you could afford to save more than £1250/£15k a year in year 2 or 3 (including the £440). If you could then admittedly £5280 less of your savings would end up in an ISA after the 3 year period. But you could still be saving them in an interet bearing account somewhere else so it wouldn't actually make much of a difference (and not enough to justify the £500 ish lost income over the 3 years).

Chris_Corbett

FoxyStoat - not really as my mortgage rate is 0.76% !

Tixy - yes I could probably put all or most of year 2 and 3 allowances in.

CLAPTON

Chris_Corbett wrote: »

FoxyStoat - not really as my mortgage rate is 0.76% !

Tixy - yes I could probably put all or most of year 2 and 3 allowances in.

if you can save 15k each year, then why ever do you want to get a loan atall?

makes even less sense